Aer Rianta's decision to reject Government demands for "low-cost" services at Dublin airport has annoyed senior members of a Government working group set up to rescue the tourism industry.

Figures close to the group are understood to have expressed unhappiness with a paper produced on Thursday by the State airports operator emphatically opposing the proposals.

The inter-departmental group met yesterday to consider an Aer Rianta paper and it is expected to report to the Cabinet on Tuesday. The Government's demands were made on foot of proposals contained in an interim report by the inter-departmental group.

It is understood that those close to the group argue that Aer Rianta should accept the suggestions because the group represents its owner, the Government.

Sources close to Aer Rianta say the company was expected to co-operate, but could not for legitimate commercial reasons.

Endorsed unanimously by the Aer Rianta board, the paper proposed paying airlines a £10 (€12.70) per passenger concession to increase visitor ticket sales.

It rejected demands to develop a new pier at Dublin airport targeted at "low-cost" carriers, stating that the provision of such a service could not be confined to one class of carrier for competition reasons.

The acting chief executive of Bord Fβilte, Mr Niall Reddy, said Aer Rianta should aim to attract "low-cost" carriers.

He said: "I consider the airports should be treated as infrastructure but we should be in a situation where they are charging the minimum landing charges.

"We need to get the low-cost airlines into Ireland because that is the area where growth has taken place."

Mr Reddy's comments were made as Aer Rianta said it would reduce aircraft landing fees from January 1st to reflect a determination on charges in August by aviation regulator, Mr Bill Prasifka.

At a public meeting in Dublin Airport yesterday, Aer Rianta's deputy chief executive, Ms Margaret Sweeney, claimed the company would lose £40 million from the reductions, which would have to be diverted from other sources.

She would not comment on a suggestion at the meeting by Mr Cathal Guiomard, who is head of economic affairs in Mr Prasifka's office, that Aer Rianta would double its landing charges if a High Court challenge to the determination was successful. Mr Guiomard replied: "With respect the logic is pretty clear."

The new charges at Dublin Airport total £8.66 per departing passenger, or £4.41 when averaged with landing passengers who are not charged.

The fee includes a £2.99 security fee per departing passenger, which does not reflect additional measures that may be taken in the wake of the attacks on the US on September 11th. Ms Sweeney declined to reveal to a Ryanair representative, Mr Charlie Clifton, why the security charge had been reduced from £3.54 per passenger in charges proposed earlier.

She said Ryanair would be equally reluctant to reveal to its passengers how some paid £9 for their tickets and some paid £200 on the same flight.